COVID makes tech policy like CDA 230 more important than ever

The most important and influential piece of tech legislation ever, Section 230 of the 1996 Communications Decency Act (CDA 230), is under fire. The policy, which immunizes a digital platform from liability associated with the content created by its users, is the regulatory bedrock on which the digital economy has been built. It has enabled the birth and growth of media platforms such as Google, YouTube, Facebook and Twitter, crowd-created information services like Wikipedia, online review sites like Yelp and TripAdvisor, and recent sharing economy stalwarts like Airbnb, Uber and DoorDash.

Almost 25 years on, one might argue that the purpose of this legislation – as a safe harbor for youthful internet pioneers – has been served and it is now time to tighten the reins on Big Tech. This would be a mistake. CDA 230 is smart legislation that is central to the functioning of today’s U.S. economy. A repeal would disrupt the de facto status of platforms as society’s main custodians of the public trust, with dire economic and social consequences. Further, an arbitrary change to the status quo will amplify the current COVID-induced recessionary shock at a time when digital channels are critical to business survival, eventually shifting power in a broad range of industries to larger economic players, and obliterating much of American small business.  

Two key tenets give CDA 230 its power. The first asserts that platforms are not considered “publishers” of the content shared by users of the platform. Consequently, Facebook is not held liable for any fallout related to information posted by a Facebook user, Yelp is not held liable for the opinions about restaurants expressed by its users and Airbnb is not held liable for representations its hosts make about the quality of the accommodations these hosts offer.  

A less understood clause, but equally important, is that CDA 230 provides a basis for platforms to govern their communities by shielding the platforms from liability if they choose to take action against objectionable community activity. Thus, Twitter can censor content it judges dangerous, YouTube can block videos it deems excessively violent or misleading and TripAdvisor can take down hotel reviews it believes are fake. 

Repealing CDA 230 can be mistakenly seen as paving a path to greater responsibility from today’s Big Tech. This is a flawed line of reasoning, naive idealism that imagines the verdant content and production ecosystem of the Internet as being unaffected by market and regulatory forces. Rather, if platforms were in fact held liable as publishers, a likely natural recourse would be for them to lower risk by favoring, perhaps exclusively, larger and more reputable providers. 

For example, absent the protections of CDA 230, it would be far safer for Facebook to allow the sharing of articles from The Hill than the stream of consciousness of an unbranded individual like you or me. Similarly, fearing the liability associated with a bad user dining experience, UberEats and DoorDash might instead focus exclusively on offering options from large corporate partners like McDonald’s and Wendy’s, abandoning the thousands of independent restaurants that have depended on them for survival as we have sheltered in place.

With all of this, the chilling effect on content variety is merely the tip of the iceberg. Although designed with the information industries in mind, the influence of CDA 230 now spans the entire economy. Online commerce has played and will continue to play a central role in lowering the failure rate of small business through the ongoing economic shutdown. Strangling the digital channels essential to future business resilience will only serve to amplify the current economic shock.

And the broader cascading effects of a repeal would significantly dampen small business innovation post-COVID, leading to immensely negative economic spillovers. For example, millions of small businesses in every industry rely on Google and Facebook advertising to reach their customers, a dependence that will only grow as continued social distancing pushes more commerce online. Regulatory change that stifles the “value creation” side of these platform businesses – free-flowing user-generated content – will threaten the viability of their “value capture” advertising networks that U.S. small businesses depend on today.

In retrospect, CDA 230 is legislation that reflects rare regulatory foresight — both facets of immunity are essential. Consider the alternative. Platforms would either be forced to screen every piece of content with an eye on potential future litigation, rendering the immediacy of social media we take for granted impossible, or they would have to cede the ability to police their communities, making every platform like the Wild West of fringe discussion boards and degrading the experience for most mainstream internet users. 

Besides, this online policing role is just one of many nation-state-like powers that society has already, de facto, granted platforms. Apart from their role as engines of the digital economy, they have immense surveillance capability, they provide us with an ID we use more frequently than our state-issued identity cards, and some even back their own currency. Platform-led governance is an inescapable facet of our future, and CDA 230 is its essential foundation. 

In a recent report for the World Economic Forum, I outlined six principles that guide these platform-led governance choices. The care with which Apple and Google have crafted their API for contact tracing, judiciously balancing individual data control and anonymity with the public good, reflects the growing sophistication of Big Tech in making smart governance choices.  

The pros and cons of CDA 230 have been debated for over two decades, and we have realized that the critical societal challenges of striking the right balance between free speech and content moderation or between authenticity and variety have no easy fix. Getting rid of CDA 230 will only compound these problems further, and in the process, will decimate small business at a time of great economic vulnerability. The irony of the current conflict between Twitter and the administration is that both of their interests are actually served well by the status quo; further, the platform may not be the stakeholder affected most adversely by rescinding platform immunity. Rather, the greatest long-run damage may be to content creators whose ideas or material are at odds with the mainstream and whose global audience reach is thus reliant on such platforms. 

Arun Sundararajan is the Harold Price Professor of Entrepreneurship and Technology at NYU’s Stern School of Business and author of the award-winning book, “The Sharing Economy.” Follow him on Twitter @digitalarun.